In addition to www.alcoa.com, Alcoa is an active participant in and uses social media to communicate information about the company. Facebook, Twitter, YouTube and LinkedIn are powerful tools that allow us to connect with our customers, investors, potential employees and fans.

NEW YORK--Alcoa (NYSE:AA) today announced second quarter 2007 income from
continuing operations of $716 million, or $0.81 per diluted share, the
second best quarterly performance in the Company’s
history and completing its best ever first half in revenues, earnings
and cash from operations. 2007 second quarter income from continuing
operations represented a five percent increase from the $0.77 in the
first quarter of 2007. In the second quarter of 2006, income from
continuing operations was $0.85.

Net income for the quarter was $715 million, or $0.81, an eight percent
increase from the first quarter of 2007. Net income for the second
quarter 2006 was $744 million, or $0.85.

For the first half of 2007, income from continuing operations grew to an
all-time record of $1.39 billion, up from last year’s
$1.36 billion first-half results. First half 2007 net income also
reached a record $1.38 billion compared to $1.35 billion in 2006.

Revenues for the quarter reached an all-time quarterly record of $8.1
billion, up from $7.9 billion in the first quarter of 2007 and $7.8
billion from a year ago. The increase was driven by higher volumes and
improved mix.

Second quarter 2007 after-tax operating income (ATOI) increased in five
of the Company’s six operating segments over
the prior quarter. The Company’s downstream
Flat-Rolled Products, Extruded and End Products, and Engineered
Solutions each achieved all-time quarterly ATOI records.

Included in the quarterly results was a favorable after-tax
restructuring adjustment of $21 million, or $0.02 per share. This was
generated mainly by the completion of the soft alloy extrusion joint
venture with Sapa. The quarterly results also included $0.02 per share
in after-tax transaction costs stemming from the Company’s
outstanding offer for Alcan.

The strong quarterly results were achieved despite $36 million after
tax, or $0.04 per share, of curtailment costs at the Tennessee and
Rockdale, TX smelters.

“We have achieved another strong quarter,
with record cash generation, record downstream performance, and our
lowest debt-to-capital ratio in nearly eight years, while continuing an
ambitious investment program,” said Alain
Belda, Alcoa Chairman and CEO. “In the
quarter, we also made a compelling offer to acquire Alcan, and are
proceeding well with the regulatory approvals necessary to complete that
transaction,” said Belda. “We
remain the natural partner for Alcan with the most substantial
synergies, and an unparalleled commitment to Canada and Quebec.”

Cash from operations in the second quarter rose to a record $1.35
billion, a more than $800 million improvement from the first quarter of
2007. The Company’s strong cash generation
performance in the quarter helped to fund its growth programs. In the
quarter, capital expenditures were $891 million, 67 percent of which was
devoted to growth projects.

The Company’s debt-to-capital ratio stood at
29.4 percent at the end of the quarter, the lowest so far this decade.
The Company's 12-month trailing return on capital (ROC) stood at 11.8
percent at the end of the second quarter, including ongoing major
investments in growth. That is higher than the 11.2 percent trailing ROC
in 2006. Excluding investments in growth, the 12-month trailing ROC was
14.7 percent in the second quarter of 2007, compared to 12.8 percent in
2006.

During the quarter, Alcoa also completed the formation of a joint
venture with Sapa of its soft alloy extrusion business. The Company also
continued to make progress on its strategic review of its packaging and
consumer and automotive castings and electrical systems businesses.
Alcoa anticipates that process will be completed by the end of 2007.

Update On Offer For Alcan

Alcoa today extended the expiration time for its offer to acquire all of
the outstanding common shares of Alcan Inc., (TSX: AL; NYSE: AL) from
5:00 p.m., Eastern Daylight Saving Time, on July 10, 2007, to 5:00 p.m.,
Eastern Daylight Saving Time, on August 10, 2007, subject to further
extension. The offer was announced by Alcoa on May 7, 2007.

All other terms and conditions of Alcoa’s
offer remain unchanged. Alcoa expects to mail a formal notice of
extension to Alcan shareholders shortly. The notice of extension will
also be electronically available on the SEDAR website at www.sedar.com
and on the EDGAR website at www.sec.gov.

“This extension period will provide Alcan’s
shareholders with more time to consider our offer while we continue to
pursue the various governmental and regulatory approvals necessary to
complete the offer,” said Belda.

Alcoa last week said it received a request for additional information
from the Antitrust Division of the U.S. Department of Justice regarding
its outstanding offer for Alcan. The Company also reiterated its
confidence the transaction would be approved in each jurisdiction.
Approximately 418,500 Alcan common shares had been deposited and not
withdrawn under Alcoa’s offer to date.

Segment and Other Results

Alumina

ATOI was $276 million, an increase of $16 million, or 6 percent, over
the prior quarter. Higher overall prices and shipments were partially
offset by the appreciation of the Australian dollar. Quarterly
production increased by 144 kmt or 4 percent.

Primary Metals

ATOI was $462 million, down $42 million, or eight percent, compared to
the prior quarter. The ATOI decrease resulted from lower LME prices,
Rockdale and Tennessee curtailment costs, unfavorable currency, and
Iceland start-up costs. Third-party realized metal prices decreased $23
per metric ton to $2,879 per ton. Primary metal production for the
quarter increased 2 kmt to 901 kmt due mainly to the restart of a second
potline at the Intalco smelter, net of the Rockdale and Tennessee
outages. The Company purchased approximately 46 kmt of primary metal for
internal use.

Flat-Rolled Products

The segment established a quarterly ATOI record of $93 million, up $31
million or 50 percent from the prior quarter. These record results were
driven by continued strength in aerospace and higher volumes in can
sheet. Productivity gains continue to exceed cost inflation. In
addition, improved Russia performance contributed to the ATOI increase.

Extruded and End Products

The segment established a quarterly ATOI record of $46 million, up $12
million or 35 percent, from the prior quarter. The improvement was due
to strong markets, especially Europe, and improved productivity.
Effective June 1, 2007 the soft alloy extrusion joint venture with Sapa
was completed. The associated volume and revenue will no longer be
recorded in this segment; equity income from the joint venture will be
recorded here.

Engineered Solutions

Another segment quarterly ATOI record was established of $105 million,
up $12 million or 13 percent from the prior quarter. Strong markets,
market share gains and new product offerings throughout our portfolio
continue to more than offset the substantial decline in U.S. Class 8
truck market of approximately 50% compared to year ago quarter. In
addition, productivity gains continue to outpace cost inflation.

Packaging and Consumer

ATOI was $37 million, an increase of $18 million, or 95 percent, over
the prior quarter. This sequential quarter increase was driven by the
normal seasonal upturn in the Consumer and Closures businesses as well
as continued productivity improvements.

ATOI to Net Income Reconciliation

The largest variances in reconciling items were in the “Corporate
Expense,”“Restructuring
& Other Charges” and “Other”
line items. “Corporate Expense”
includes the transaction costs stemming from the Company’s
outstanding offer for Alcan. “Restructuring &
Other Charges” includes the favorable
after-tax impact from completion of the soft alloy extrusion joint
venture with Sapa. “Other”
includes a portion of the Tennessee curtailment cost due to our captive
insurance company.

Alcoa will hold its quarterly conference call at 5:00 PM Eastern Time on
July 9, 2007 to present the quarter's results. The meeting will be
webcast via alcoa.com. Call information and related details are
available at www.alcoa.com under
"Invest."

Alcoa is the world's leading producer and manager of primary aluminum,
fabricated aluminum and alumina facilities, and is active in all major
aspects of the industry. Alcoa serves the aerospace, automotive,
packaging, building and construction, commercial transportation and
industrial markets, bringing design, engineering, production and other
capabilities of Alcoa's businesses to customers. In addition to aluminum
products and components including flat-rolled products, hard alloy
extrusions, and forgings, Alcoa also markets Alcoa®
wheels, fastening systems, precision and investment castings, structures
and building systems. The Company has 116,000 employees in 44 countries
and has been named one of the top most sustainable corporations in the
world at the World Economic Forum in Davos, Switzerland. More
information can be found at www.alcoa.com

Forward Looking Statements

Certain statements and assumptions in this communication contain or are
based on "forward-looking" information and involve risks and
uncertainties. Forward-looking statements may be identified by their use
of words like "anticipates," "believes," "estimates," "expects,"
"hopes," "targets," "should," "will," "will likely result," "forecast,"
"outlook," "projects" or other words of similar meaning. Such
forward-looking information includes, without limitation, the statements
as to the impact of the proposed acquisition of Alcan on revenues, costs
and earnings. Such forward-looking statements are subject to numerous
assumptions, uncertainties and risks, many of which are outside of
Alcoa's control. Accordingly, actual results and developments are likely
to differ, and may differ materially, from those expressed or implied by
the forward-looking statements contained in this communication. These
risks and uncertainties include Alcoa's ability to successfully
integrate the operations of Alcan; the outcome of contingencies
including litigation, environmental remediation, divestitures of
businesses, and anticipated costs of capital investments; general
business and economic conditions; interest rates; the supply and demand
for, deliveries of, and the prices and price volatility of primary
aluminum, fabricated aluminum, and alumina produced by Alcoa and Alcan;
the timing of the receipt of regulatory and governmental approvals
necessary to complete the acquisition of Alcan and any undertakings
agreed to in connection with the receipt of such regulatory and
governmental approvals; the timing of receipt of regulatory and
governmental approvals for Alcoa's and Alcan's development projects and
other operations; the availability of financing to refinance
indebtedness incurred in connection with the acquisition of Alcan on
reasonable terms; the availability of financing for Alcoa's and Alcan's
development projects on reasonable terms; Alcoa's and Alcan's respective
costs of production and their respective production and productivity
levels, as well as those of their competitors; energy costs; Alcoa's and
Alcan's ability to secure adequate transportation for their respective
products, to procure mining equipment and operating supplies in
sufficient quantities and on a timely basis, and to attract and retain
skilled staff; the impact of changes in foreign currency exchange rates
on Alcoa's and Alcan's costs and results, particularly the Canadian
dollar, Euro, and Australian dollar, may affect profitability as some
important raw materials are purchased in other currencies, while
products generally are sold in U.S. dollars; engineering and
construction timetables and capital costs for Alcoa's and Alcan's
development and expansion projects; market competition; tax benefits and
tax rates; the outcome of negotiations with key customers; the
resolution of environmental and other proceedings or disputes; and
Alcoa's and Alcan's ongoing relations with their respective employees
and with their respective business partners and joint venturers.

Additional risks, uncertainties and other factors affecting forward
looking statements include, but are not limited to, the following:

Alcoa is, and the combined company will be, subject to cyclical
fluctuations in London Metal Exchange primary aluminum prices,
economic and business conditions generally, and aluminum end-use
markets;

Alcoa's operations consume, and the combined company's operations will
consume, substantial amounts of energy, and profitability may decline
if energy costs rise or if energy supplies are interrupted;

The profitability of Alcoa and/or the combined company could be
adversely affected by increases in the cost of raw materials;

Alcoa and/or the combined company may not be able to successfully
implement its growth strategy;

Alcoa's operations are, and the combined company's operations will be,
exposed to business and operational risks, changes in conditions and
events beyond its control in the countries in which it operates;

Alcoa is, and the combined company will be, exposed to fluctuations in
foreign currency exchange rates and interest rates, as well as
inflation and other economic factors in the countries in which it
operates;

Alcoa faces, and the combined company will face, significant price
competition from other aluminum producers and end-use markets for
Alcoa products that are highly competitive;

Alcoa and/or the combined company could be adversely affected by
changes in the business or financial condition of a significant
customer or customers;

Alcoa and/or the combined company may not be able to successfully
implement its productivity and cost-reduction initiatives;

Alcoa and/or the combined company may not be able to successfully
develop and implement new technology initiatives;

Alcoa is, and the combined company will be, subject to a broad range
of environmental laws and regulations in the jurisdictions in which it
operates and may be exposed to substantial costs and liabilities
associated with such laws;

Alcoa’s smelting operations are expected to
be affected by various regulations concerning greenhouse gas emissions;

Alcoa and the combined company may be exposed to significant legal
proceedings, investigations or changes in law; and

See also the risk factors disclosed in Alcoa's Annual Report on Form
10-K for the fiscal year ended December 31, 2006 and Quarterly Report on
Form 10-Q for the quarter ended March 31, 2007. Readers are cautioned
not to put undue reliance on forward-looking statements. Alcoa disclaims
any intent or obligation to update these forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by applicable law.

WHERE TO FIND ADDITIONAL INFORMATION

In connection with the offer by Alcoa to purchase all of the issued and
outstanding common shares of Alcan (the “Offer”),
Alcoa has filed with the Securities and Exchange Commission (the “SEC”)
a registration statement on Form S-4 (the “Registration
Statement”), which contains a prospectus
relating to the Offer (the “Prospectus”),
and a tender offer statement on Schedule TO (the “Schedule
TO”), each as amended. This communication is
not a substitute for the Prospectus, the Registration Statement and the
Schedule TO. ALCAN SHAREHOLDERS AND OTHER INTERESTED PARTIES ARE URGED
TO READ THESE DOCUMENTS, ALL OTHER APPLICABLE DOCUMENTS AND ANY
AMENDMENTS OR SUPPLEMENTS TO ANY SUCH DOCUMENTS WHEN THEY BECOME
AVAILABLE, BECAUSE EACH CONTAINS OR WILL CONTAIN IMPORTANT INFORMATION
ABOUT ALCOA, ALCAN AND THE OFFER. Materials filed with the SEC are
available electronically without charge at the SEC’s
website, www.sec.gov. Materials filed with the Canadian securities
regulatory authorities ("CSRA") are available electronically without
charge at www.sedar.com. Materials filed with the SEC or the CSRA may
also be obtained without charge at Alcoa’s
website, www.alcoa.com, or by directing a request to Alcoa’s
investor relations department at (212) 836-2674. In addition, Alcan
shareholders may obtain free copies of such materials filed with the SEC
or the CSRA by directing a written or oral request to the Information
Agent for the Offer, MacKenzie Partners, Inc., toll-free at (800)
322-2885 (English) or (888) 405-1217 (French).

While the Offer is being made to all holders of Alcan Common Shares,
this communication does not constitute an offer or a solicitation in any
jurisdiction in which such offer or solicitation is unlawful. The Offer
is not being made in, nor will deposits be accepted in, any jurisdiction
in which the making or acceptance thereof would not be in compliance
with the laws of such jurisdiction. However, Alcoa may, in its sole
discretion, take such action as it may deem necessary to extend the
Offer in any such jurisdiction.

Alcoa and subsidiaries

Condensed Statement of Consolidated Income (unaudited)

(in millions, except per-share, share, and metric ton amounts)

Quarter ended

June 30,

March 31,

June 30,

2006 (a)

2007

2007

Sales

$

7,797

$

7,908

$

8,066

Cost of goods sold (exclusive of expenses below)

5,827

6,007

6,178

Selling, general administrative, and other expenses

354

357

367

Research and development expenses

50

52

55

Provision for depreciation, depletion, and amortization

324

304

317

Restructuring and other charges

(9

)

26

(57

)

Interest expense

98

83

86

Other income, net

(61

)

(44

)

(60

)

Total costs and expenses

6,583

6,785

6,886

Income from continuing operations before taxes on income

1,214

1,123

1,180

Provision for taxes on income

341

335

354

Income from continuing operations before minority interests’
share

873

788

826

Less: Minority interests’ share

124

115

110

Income from continuing operations

749

673

716

Loss from discontinued operations

(5

)

(11

)

(1

)

NET INCOME

$

744

$

662

$

715

Earnings (loss) per common share:

Basic:

Income from continuing operations

$

.86

$

.77

$

.82

Loss from discontinued operations

(.01

)

(.01

)

–

Net income

$

.85

$

.76

$

.82

Diluted:

Income from continuing operations

$

.85

$

.77

$

.81

Loss from discontinued operations

–

(.02

)

–

Net income

$

.85

$

.75

$

.81

Average number of shares used to compute:

Basic earnings per common share

869,811,164

868,824,621

872,978,729

Diluted earnings per common share

877,005,617

875,753,052

882,742,445

Shipments of aluminum products (metric tons)

1,400,000

1,365,000

1,364,000

Alcoa and subsidiaries

Condensed Statement of Consolidated Income (unaudited), continued

(in millions, except per-share, share, and metric ton amounts)

Six months ended

June 30,

2006 (a)

2007

Sales

$

14,908

$

15,974

Cost of goods sold (exclusive of expenses below)

11,171

12,185

Selling, general administrative, and other expenses

709

724

Research and development expenses

97

107

Provision for depreciation, depletion, and amortization

630

621

Restructuring and other charges

(8

)

(31

)

Interest expense

190

169

Other income, net

(96

)

(104

)

Total costs and expenses

12,693

13,671

Income from continuing operations before taxes on income

2,215

2,303

Provision for taxes on income

623

689

Income from continuing operations before minority interests’
share

1,592

1,614

Less: Minority interests’ share

229

225

Income from continuing operations

1,363

1,389

Loss from discontinued operations

(11

)

(12

)

NET INCOME

$

1,352

$

1,377

Earnings (loss) per common share:

Basic:

Income from continuing operations

$

1.57

$

1.59

Loss from discontinued operations

(.02

)

(.01

)

Net income

$

1.55

$

1.58

Diluted:

Income from continuing operations

$

1.55

$

1.58

Loss from discontinued operations

(.01

)

(.02

)

Net income

$

1.54

$

1.56

Average number of shares used to compute:

Basic earnings per common share

870,195,464

871,174,885

Diluted earnings per common share

876,595,985

879,625,327

Common stock outstanding at the end of the period

869,315,328

876,432,795

Shipments of aluminum products (metric tons)

2,750,000

2,729,000

(a)The Condensed Statement of Consolidated Income for the
quarter and six-month periods ended June 30, 2006 has been
reclassified to reflect the movement of the home exteriors
business to discontinued operations in the third quarter of 2006.

Alcoa and subsidiaries

Condensed Consolidated Balance Sheet (unaudited)

(in millions)

December 31,2006

June 30,2007

ASSETS

Current assets:

Cash and cash equivalents

$

506

$

1,168

Receivables from customers, less allowances of $75 in 2006 and $66
in 2007

(b) The Condensed Statement of Consolidated Cash Flows as of June
30, 2006 has been reclassified to reflect the movement of
the home exteriors business to discontinued operations and as
held for sale in the third quarter of 2006, and the soft alloy
extrusions business as held for sale in the fourth quarter of
2006.

(c) A reclassification of $53 related to income taxes was made in
the June 30, 2006 period to conform to the current period
presentation.

Alcoa and subsidiaries

Segment Information (unaudited)

(dollars in millions, except realized prices; production and
shipments in thousands of metric tons [kmt])

1Q06

2Q06

3Q06

4Q06

2006

1Q07

2Q07

Alumina:

Alumina production (kmt)

3,702

3,746

3,890

3,790

15,128

3,655

3,799

Third-party alumina shipments (kmt)

2,023

2,108

2,205

2,084

8,420

1,877

1,990

Third-party sales

$

628

$

713

$

733

$

711

$

2,785

$

645

$

712

Intersegment sales

$

555

$

515

$

524

$

550

$

2,144

$

579

$

587

Equity (loss) income

$

(1

)

$

–

$

(2

)

$

1

$

(2

)

$

1

$

–

Depreciation, depletion, and amortization

$

43

$

46

$

47

$

56

$

192

$

56

$

62

Income taxes

$

93

$

112

$

108

$

115

$

428

$

100

$

102

After-tax operating income (ATOI)

$

242

$

278

$

271

$

259

$

1,050

$

260

$

276

Primary Metals:

Aluminum production (kmt)

867

882

895

908

3,552

899

901

Third-party aluminum shipments (kmt)

488

508

535

556

2,087

518

565

Alcoa’s average realized price per metric
ton of aluminum

$

2,534

$

2,728

$

2,620

$

2,766

$

2,665

$

2,902

$

2,879

Third-party sales

$

1,408

$

1,589

$

1,476

$

1,698

$

6,171

$

1,633

$

1,746

Intersegment sales

$

1,521

$

1,696

$

1,467

$

1,524

$

6,208

$

1,477

$

1,283

Equity income

$

20

$

28

$

16

$

18

$

82

$

22

$

18

Depreciation, depletion, and amortization

$

96

$

102

$

100

$

97

$

395

$

95

$

102

Income taxes

$

197

$

209

$

140

$

180

$

726

$

214

$

196

ATOI

$

445

$

489

$

346

$

480

$

1,760

$

504

$

462

Flat-Rolled Products:

Third-party aluminum shipments (kmt)

562

579

568

564

2,273

568

583

Third-party sales

$

1,940

$

2,115

$

2,115

$

2,127

$

8,297

$

2,275

$

2,344

Intersegment sales

$

49

$

66

$

65

$

66

$

246

$

60

$

63

Equity loss

$

–

$

(1

)

$

–

$

(1

)

$

(2

)

$

–

$

–

Depreciation, depletion, and amortization

$

50

$

57

$

57

$

55

$

219

$

55

$

55

Income taxes

$

26

$

25

$

19

$

(2

)

$

68

$

26

$

33

ATOI

$

66

$

79

$

48

$

62

$

255

$

62

$

93

Extruded and End Products:

Third-party aluminum shipments (kmt)

223

231

220

203

877

213

146

Third-party sales

$

1,038

$

1,165

$

1,146

$

1,070

$

4,419

$

1,175

$

965

Intersegment sales

$

23

$

31

$

20

$

25

$

99

$

42

$

26

Equity income

$

–

$

–

$

–

$

–

$

–

$

–

$

9

Depreciation, depletion, and amortization

$

28

$

30

$

29

$

31

$

118

$

9

$

10

Income taxes

$

1

$

8

$

7

$

2

$

18

$

11

$

29

ATOI

$

–

$

17

$

16

$

27

$

60

$

34

$

46

Engineered Solutions:

Third-party aluminum shipments (kmt)

37

38

34

30

139

31

30

Third-party sales

$

1,360

$

1,405

$

1,345

$

1,346

$

5,456

$

1,449

$

1,478

Equity income (loss)

$

–

$

–

$

1

$

(5

)

$

(4

)

$

–

$

–

Depreciation, depletion, and amortization

$

40

$

42

$

43

$

44

$

169

$

41

$

42

Income taxes

$

37

$

44

$

35

$

(15

)

$

101

$

44

$

47

ATOI

$

83

$

100

$

75

$

73

$

331

$

93

$

105

Packaging and Consumer:

Third-party aluminum shipments (kmt)

40

44

39

46

169

35

40

Third-party sales

$

749

$

834

$

815

$

837

$

3,235

$

736

$

837

Equity income

$

–

$

–

$

–

$

1

$

1

$

–

$

–

Depreciation, depletion, and amortization

$

31

$

31

$

30

$

32

$

124

$

30

$

30

Income taxes

$

5

$

9

$

8

$

11

$

33

$

7

$

17

ATOI

$

8

$

37

$

24

$

26

$

95

$

19

$

37

Reconciliation of ATOI to consolidated net income:

Total segment ATOI

$

844

$

1,000

$

780

$

927

$

3,551

$

972

$

1,019

Unallocated amounts (net of tax):

Impact of LIFO (1)

(36

)

(49

)

(19

)

(66

)

(170

)

(27

)

(16

)

Interest income

11

10

23

14

58

11

9

Interest expense

(60

)

(63

)

(66

)

(61

)

(250

)

(54

)

(56

)

Minority interests

(105

)

(124

)

(109

)

(98

)

(436

)

(115

)

(110

)

Corporate expense

(89

)

(82

)

(64

)

(82

)

(317

)

(86

)

(101

)

Restructuring and other charges

(1

)

6

2

(386

)

(379

)

(18

)

21

Discontinued operations

(6

)

(5

)

(3

)

101

87

(11

)

(1

)

Other

50

51

(7

)

10

104

(10

)

(50

)

Consolidated net income

$

608

$

744

$

537

$

359

$

2,248

$

662

$

715

(1) Certain amounts for the first and second quarter of 2006 have
been reclassified to Other so that this line reflects only the
impact of LIFO. Presenting the Impact of LIFO as a separate
line in the Reconciliation of ATOI started in the third quarter
of 2006.

Certain amounts for the first and second quarter of 2006 includedin
the Extruded and End Products segment and the Reconciliation ofATOI
have been reclassified to reflect the movement of the homeexteriors
business to discontinued operations in the third quarterof
2006. Also, the equity income reflected in the Extruded and EndProducts
segment for the second quarter of 2007 represents Alcoa'sshare
of the results of operations for the month of June 2007 ofthe
newly formed joint venture with Orkla ASA's Sapa Group (Sapa)that
combined Alcoa's soft alloy extrusions business with Sapa'sProfiles
extruded aluminum business.

Capital projects in progress and
capital base of growth investments(3)

(2,330)

(4,521)

Adjusteddenominator

$

20,091

$

20,602

Return on capital

11.2%

11.8%

Return on capital, excludinggrowth
investments

12.8%

14.7%

Return on capital, excluding growth investments is a non-GAAP
financial measure. Management believes that this measure is meaningful
to investors because it provides greater insight with respect to the
underlying operating performance of the company's productive assets.
The company has significant growth investments underway in its
upstream and downstream businesses, as previously noted, with
expected completion dates over the next several years. As these
investments generally require a period of time before they are
productive, management believes that a return on capital measure
excluding these growth investments is more representative of current
operating performance.
(1) The Bloomberg Methodology calculates ROC based on the trailing
four quarters. Average balances are calculated as (June 2007
ending balance + June 2006 ending balance) divided by 2 for the
twelve-month period ending June 30, 2007, and (June 2006 ending
balance + June 2005 ending balance) divided by 2 for the
twelve-month period ending June 30, 2006.
(2) Certain financial information has been reclassified to reflect
the movement of the home exteriors business to discontinued
operations in the third quarter of 2006 and the soft alloy
extrusions business as held for sale in the fourth quarter of
2006.
(3) For all periods presented, growth investments include Russia and
Bohai. Kunshan is also included as a growth investment for the
twelve-month period ending June 30, 2007.
(4) Calculated as total shareholders' equity less preferred stock.

Alcoa and subsidiaries

Calculation of Financial Measures (unaudited), continued

(in millions)

Days of Working Capital

Quarter ended

June 30,

2006 (a)

March 31,

2007

June 30,

2007

Receivables from customers, less allowances

$

3,143

$

3,314

$

3,370

Add: Inventories

3,820

3,780

3,633

Less: Accounts payable, trade

2,536

2,570

2,668

Working Capital

$

4,427

$

4,524

$

4,335

Sales

$

7,797

$

7,908

$

8,066

Days of Working Capital

51.7

51.5

48.9

Days of Working Capital = Working Capital divided by (Sales/number of
days in the quarter)
(a) Certain financial information has been reclassified to reflect
the movement of the home exteriors business to discontinued
operations and as held for sale in the third quarter of 2006, and
the soft alloy extrusions business as held for sale in the fourth
quarter of 2006.

Alcoa and subsidiaries

Calculation of Financial measures (unaudited), continued

(in millions, except per-share amounts)

Net Income

Diluted EPS

Quarter ended

Six months ended

Quarter ended

Six months ended

2Q06(a)

1Q07

2Q07

2Q06(a)

2Q07

2Q06(a)

1Q07

2Q07

2Q06(a)

2Q07

Net income

$

744

$

662

$

715

$

1,352

$

1,377

$

0.85

$

0.75

$

0.81

$

1.54

$

1.56

Loss from discontinued operations

(5

)

(11

)

(1

)

(11

)

(12

)

Income from continuing operations

749

673

716

1,363

1,389

0.85

0.77

0.81

1.55

1.58

Transaction costs(b)

–

–

17

–

17

Restructuring and other charges

(6

)

18

(21

)

(5

)

(3

)

Income from continuing operations –
excluding restructuring and other charges and transaction costs

$

743

$

691

$

712

$

1,358

$

1,403

0.85

0.79

0.81

1.55

1.59

Income from continuing operations - excluding restructuring and other
charges and transaction costs is a non-GAAP financial measure.
Management believes that this measure is meaningful to investors
because management reviews the operating results of Alcoa excluding
the impacts of restructuring and other charges and transaction costs.
There can be no assurances that additional restructuring and other
charges and transaction costs will not occur in future periods. To
compensate for this limitation, management believes that it is
appropriate to consider both income from continuing operations
determined under GAAP as well as income from continuing operations -
excluding restructuring and other charges and transaction costs.
(a) Certain financial information has been reclassified to reflect
the movement of the home exteriors business to discontinued
operations in the third quarter of 2006.
(b) Transaction costs (investment banking, legal, accounting, and
other third-party expenses related to the Alcan offer) are
included in Selling, general administrative, and other expenses
on the Condensed Statement of Consolidated Income.